When a firm produces an information product the initial or fixed costs are low low or high unpredictable high . Part 2 Consequently the average fixed cost and average total cost change are constant increase decrease as the volume of output increases. Part 3 Since most of the costs are the initial fixed costs of development, once the product is developed, the marginal average total cost of producing more units of the product are typically low and decreasing increasing constant . Part 4 In this case, then, the low and constant marginal cost is above equal to below the average cost. Part 5 If the firm set the price, or average revenue, of the product equal to the marginal cost, the firm would have normal profits economic losses economic profits Part 6 since the marginal cost is less than greater than equal to the average cost